A draft order filed by the staff of the state’s Public Utility Commission in advance of a Thursday meeting would find that the merger isn’t in the public interest and block the utilities from moving forward.

All three commissioners have individually reviewed and support the order, agency spokesman Terry Hadley said. It was added Wednesday to the meeting’s consent agenda, allowing for a vote without further discussion.

Who gets hurt is the deal does fall apart? Angelo Thalassinos, a senior distressed debt legal analyst at Reorg Research, has this to say:

If the NextEra deal falls apart, which now seems imminent, any subsequent suitor would have learned from the two prior PUC processes but is also likely to provide a lower offer. Who does that hurt the most? Creditors of EFH Corp. and unsecured bondholders at EFIH.

Oncor’s sale is key to its parent, Energy Future Holdings, emerging from bankruptcy. Created by the biggest leveraged buyout on record, Energy Future has labored for the past several years to restructure almost $50 billion in debt. If the NextEra deal disintegrates, it must come up with another plan to market the profitable part of its business.

The company has already tried and failed to sell Oncor.

As for NextEra, Morgan Stanley still rates the stock an overweight.

We had estimated $0.20-0.25 of accretion from the Oncor acquisition, but did not incorporate any related earnings into our estimates or valuation. NEE trades at a -4% discount on 2018e consensus EPS relative to regulated utility peers, yet offers above average 6-8% EPS growth through 2020e and the company has guided to an attractive 12-14% dividend/share growth. We believe this earnings growth is resilient to potential tax reform and renewable policy changes, and management noted an ability to grow at the top end of the range even without closing the Oncor transaction. Thus we continue to see the stock as offering one of the best risk-rewards within our coverage.

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